INDUSTRIAL POLICY

OF INDIA

2Q
 Industrial Policy
• It covers rules, regulations, principles,
policies, & procedures laid down by
government for regulating & controlling
industrial undertakings in the country.
• It prescribes the respective roles of the
public, private, joint, cooperative large,
medium & small scale sectors for the
development of industries.
 Industrial Policy Contd...
• It incorporates fiscal & monetary
policies, tariff policy, labor policy.
• It shows the government attitude not only
towards external assistance but also
toward public & private sectors.
 Main Objectives

• To maintain a sustained growth in

productivity
• To enhance gainful employment
• To prevent undue concentration of
economic power
 Main Objectives
• To achieve optimal utilization of
human resources
• To attain international competitiveness
and
• To transform India into a major partner
and player in the global arena
 Industrial Policies
• Industrial Policy Resolution of 1948
• Industrial Policy Resolution of 1956
• Industrial Policy Resolution of 1973
• Industrial Policy Resolution of 1977
• Industrial Policy Resolution of 1980
• The New Industrial Policy of 1991
 INDUSTRIAL POLICY
RESOLUTION 1948
(6 April, 1948)
The Resolution emphasized at the following;
1. The importance to the economy of securing
a continuous increase in production.
2. Its equitable distribution.
3. State must play progressively active
role in the development of Industries.
4. It laid down that besides arms and ammunition,
atomic energy and railway transport, which would
be the monopoly of the Central Government, the
State would be exclusively responsible for the
establishment of new undertakings in six basic
industries-except where, in the national interest,
the State itself found it necessary to secure the
cooperation of private enterprise.
5. The rest of the industrial field was left
open to private enterprise though it was
made clear that the State would also
progressively participate in this field.
 INDUSTRIAL POLICY
RESOLUTION, (30th April, 1956)
1. Improving living standards and working
conditions for the mass of the people.
2. To reduce disparities in income and wealth.
3. To prevent private monopolies and
concentration of economic power in
different fields in the hands of small
numbers of individuals.
4. The State will progressively assume a
predominant and direct responsibility for
setting up new industrial undertakings and
for developing transport facilities.

5. At the same time private sector will have

the opportunity to develop and expand.
6. The principle of cooperation should be
applied whenever possible and a steadily
increasing proportion of the activities of the
private sector developed along cooperative lines.
7. The adoption of the socialist pattern of society as
the national objective.
8. The need for planned and rapid development.
10. All industries of basic and strategic importance,
or in the nature of public utility services, should
be in the public sector.
11. It is always open to the State to undertake any
type of industrial production.
12. Categorization of industries;
i) In the first category will be industries the
future development of which will be the exclusive
responsibility of the State.
ii) The second category will consist of
industries which will be progressively state-
owned and in which the State will,
therefore, generally take the initiative in
establishing new undertakings, but in which
private enterprise will also be expected to
supplement the efforts of the State.
iii) The third category will include all the
remaining industries, and their future development
will, in general, be left to the initiative and
enterprise of the private sector.
13.The Government of India would stress the role of
cottage and village and small scale industries in
the development of the national economy.
14. Disparities in levels of development between
different regions should be progressively reduced.
 INDUSTRIAL POLICY
FEBRUARY 2, 1973
1. The Industrial Policy Resolution of 1956
still remained valid, but certain structural
distortions had crept in the system.
2. The new policies were hence directed
towards removing these distortions.
3. It provided for a closer interaction
between the agricultural and industrial
sectors.
4. Accorded the highest priority to the generation
and transmission of power.
5. An exhaustive analysis of industrial products was
made to identify products which are capable of
being produced in the small scale sector.
6. The list of industries exclusively reserved for the
small scale sector was expanded from 180 items to
more than 500 items.
7. Within the small scale sector, a tiny sector
was also defined with investment in machinery and
equipment upto Rs.1 lakh and situated in towns
with a population of less than 50,000 according to
1971 census figures, and in villages.
9. It was also decided that compulsory export
obligations, merely for ensuring the foreign
exchange balance of the project, would no longer
be insisted upon while approving new industrial
capacity.
10. In the areas of price control of agricultural and
industrial products, the prices would be regulated
to ensure an adequate return to the investor.
 INDUSTRIAL POLICY
DECEMBER 23, 1977
1. Industrial Policy Highlights on producing inputs
needed by a large number of smaller units and
making adequate marketing arrangements.
2. To boost the development of small scale
industries, the investment limit in the case of
tiny units was enhanced to Rs.2 lakh, of a
small scale units to Rs.20 lakh and of ancillaries
to Rs.25 lakh.
3. A scheme for building buffer stocks of essential
raw materials for the Small Scale Industries was
introduced for operation through the Small
Industries Development Corporations in the States
and the National Small Industries Corporation in
the Centre.
4. Industrial processes and technologies
aimed at optimum utilisation of energy or
the exploitation of alternative sources of
energy would be given special assistance,
including finance on concessional terms.
 The Industrial Policy Statement of
July 1980,
It was based on the Industrial Policy Resolution of 1956
(i) Optimum utilisation of installed capacity;
(ii) Maximum production and achieving higher productivity;
(iii) Higher employment generation;
(iv) Correction of regional imbalances;
(v) Strengthening of the agricultural base through agro based
industries and promotion of optimum inter-sectoral
relationship;
(vi) Promotion of export-oriented industries;
(vii) Promotion of economic federalism
through equitable spread of investment
and dispersal of returns;
(viii) Consumer protection against high prices
and bad quality.
 INDUSTRIAL POLICY, JULY 24,
1991.
1. Government is pledged to launching a
reinvigorated struggle for social and economic
justice, to end poverty and unemployment and to
build a modern, democratic, socialist, prosperous
and forward-looking India.
2. Such a society can be built if India grows as part
of the world economy and not in isolation.
3. While Government will continue to follow the
policy of self-reliance, there would be greater
emphasis placed on building up our ability to pay
for imports through our own foreign exchange
earnings.
4. Government is also committed to development
and utilisation of indigenous capabilities in
technology and manufacturing as well as its
upgradation to world standards.
5. Government will continue to pursue a sound
policy framework encompassing encouragement
of entrepreneurship, development of indigenous
technology through investment in research and
development, bringing in new technology,
dismantling of the regulatory system, development
of the capital markets and increasing
competitiveness for the benefit of the common
man.
6. The spread of industrialisation to backward
areas of the country will be actively promoted
through appropriate incentives, institutions and
infrastructure investments.
7. Government will provide enhanced support to
the small-scale sector so that it flourishes in an
environment of economic efficiency and
continuous technological upgradation.
8. Foreign investment and technology
collaboration will be welcomed to obtain higher
technology, to increase exports and to expand the
production base.
9. Government will endeavour to abolish the
monopoly of any sector or any individual
enterprise in any field of manufacture, except on
strategic or military considerations and open all
manufacturing activity to competition.
10. The Government will ensure that the public
sector plays its rightful role in the evolving
socioeconomic scenario of the country.
Government will ensure that the public sector is
run on business lines as envisaged in the Industrial
Policy Resolution of 1956 and would continue to
innovate and lead in strategic areas of national
importance.
11.Government will fully protect the interests
of labour, enhance their welfare and equip
them in all respects to deal with the
inevitability of technological change.
12. Labour will be made an equal partner in
progress and prosperity.
13. Workers’ participation in management
will be promoted.
14. Workers cooperatives will be encouraged to
participate in packages designed to turn around
sick companies.
15. The major objectives of the new industrial
policy package will be to build on the gains
already made, correct the distortions or
weaknesses that may have crept in, maintain a
sustained growth in productivity and gainful
employment and attain international
competitiveness.
16. need to preserve the environment and
ensure the efficient use of available
resources.
17. Government’s policy will be continuity
with change.
18. In pursuit of the above objectives, Government
have decided to take a series of initiatives in respect
of the policies relating to the following areas.
A. Industrial Licensing.
B. Foreign Investment.
C. Foreign Technology Agreements.
D. Public Sector Policy.
E. MRTP Act.
 Review of Industrial
Performance
Index of Industrial Production.